Tag Archives: fcpa

PetroTiger CEO pleads guilty to FCPA violation in Colombia

PolitickerNJ has the story.

The former co-chief executive officer (CEO) of PetroTiger Ltd. – a British Virgin Islands oil and gas company with operations in Colombia and formerly with an office in New Jersey – pleaded guilty today to conspiring to pay bribes to a foreign government official in violation of the Foreign Corrupt Practices Act (FCPA)…

Sigelman admitted to conspiring with co-CEO Knut Hammarskjold, PetroTiger’s former general counsel Gregory Weisman, and others to make illegal payments of $333,500 to David Duran, an employee of the Colombian national oil company, Ecopetrol…

Colombia … announced in March of this year the arrests of Duran, his wife, a former employee of PetroTiger, and several other officials from Ecopetrol…

Go read it all

And here, yours at no extra charge, is the superseding indictment.

Did Pratt & Whitney do all it could to avoid a corrupt deal?

A document leaked to the web in November raises questions about whether multinational companies did all they could — and all they were legally required to do — to avoid participating in potential corruption in Venezuela’s electricity industry.

The document in question is a chain of e-mails between Pratt & Whitney Power Systems and ProEnergy Services. It, along with the others in that same collection of ostensible leaks, appears to show that some of the turbines eventually sold to Venezuela came from Pratt & Whitney Power Systems. At the time, that company was a unit of publicly traded United Technology Corp. (UTX), but has since been sold to Mitsubishi Heavy Industries Ltd. (7011.jp OTC:MHVYF ) and renamed PW Power Systems.

I found this interesting. Ever since 2011, when we first heard tales of Venezuelan state companies buying turbines at inflated prices, I always wondered how big companies like Pratt & Whitney, General Electric Corp. (GE), and Rolls Royce Holdings Plc (RR.L) could have gotten mixed up in this, since US law gives them a responsibility to run due-diligence checks on their local partners. In the words of Carl H. Loewenson, Jr. of big US law firm Morrison Foerster:

The simple fact is that parties should know with whom they are doing business. Companies and individuals should take necessary precautions to ensure that they have formed a business relationship with reputable and qualified third parties.

The extent of diligence that should be conducted on a particular third party is a fact-based inquiry that will vary depending on a number of factors, including the industry, the market, the type of transaction, and the historical relationship with the third party.

At a minimum, companies should understand the “qualifications and associations” of its third- party intermediaries. That is, companies should understand the business rationale for hiring the third party as well as the intermediaries’ business reputation and government affiliations. As the DOJ and SEC make clear in the Resource Guide, “the degree of scrutiny should increase as red flags surface.”

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WSJ says Proenergy, Derwick Associates face corruption investigation

The Wall Street Journal says US authorities are pursuing a preliminary investigation of Derwick Associates and Proenergy Services for possible banking and overseas corruption violations. No charges have been brought and Derwick denies everything.

Derwick is an exceptionally lucky electricity industry middleman in Venezuela and Proenergy Services is the ultimate recipient of its contracts. Derwick has in the past claimed that I am part of a defamation campaign against it. I’m not. The WSJ story starts thus. I am quoting at greater length than usual, sorry:

NEW YORK—Federal and New York City prosecutors have opened preliminary investigations into a Venezuelan company that became one of that country’s leading builders of power plants during the administration of President Hugo Chávez, as well as into a Missouri-based company which played a key role in its success, people familiar with the matter say.

The U.S. Department of Justice and the Manhattan District Attorneys’ office are probing Derwick Associates, a Venezuelan company that was awarded hundreds of millions of dollars in contracts in little more than a year to build power plants in Venezuela shortly after the country’s power grid began to sputter in 2009, the people familiar with the matter said.

ProEnergy Services, a Sedalia, Mo.-based engineering, procurement and construction company which sold dozens of turbines to Derwick and helped build the plants, is also under investigation, these people say.

The probes are in their initial phases, these people say, and it is possible that both investigations could be closed without criminal charges being brought. Continue reading